I live in Los Angeles and I do not believe there is any shortage of scuba instructors. I believe that you are confusing group classes with private and semi-private classes. Generally speaking the amount of time it takes to teach a class is approximately the same whether teaching one student or a group (usually a little longer with a group as the instructor has to have each student demonstrate each skill) I think you might agree that a person who engages an instructor to teach him/her one on one would and should pay more than someone who joins a group class. That is a standard procedure no matter what class a person wishes to take.
Also, let me suggest to you that a scuba instructor has spent thousands of dollars and a great deal of time and effort to acquire the skills and expertise, not to mention the money spent on equipment, maintenance of that equipment, dues to certifying agencies, liability insurance and on and on to become and remain an instructor. Teaching an open water class to one or a group of students takes varying amounts of time depending on whether or not the instructor teaches the academic portions or relies on e-learning or home study but we can safely assume that the process can take anywhere from 30 to 45 hours considering that usually two full days are required for open water dives. Now, when someone takes a tennis lesson at (I'm guessing here) say $60 per hour or a golf lesson at $80 an hour or hires a private fitness trainer for anywhere from $60-$120 an hour they usually don't complain. However, if you miss a serve or a putt or don't make that last rep -- NO ONE DIES. If I or any other scuba instructor does not do his/her job properly people can die. Your life is in the scuba instructor's hands. Isn't that worth paying for just as much as a tennis or golf lesson?
The usual going rate to an instructor who teaches group classes through a shop in Los Angeles is around $100 per person. 6 hours or so in the pool, a couple of 12 hour days at the ocean (not to mention prep time) And the variable number of hours teaching the academic portion, administering and grading exams, filling out paperwork and so on. People are getting an incredible bargain at the current rates and should not complain.
I think you failed to notice that Austin Takahashi live in the Philippines and not in the US, so your comment regarding the number of dive instructors cannot be applied.
Average salary of a Filipino is well below that of a US resident.
The remainder of my post is independent of my reply to Stedel
Having lived in the Middle East since 1986 I have witnessed a wide range of dive instructors in this region from committed full time instructors to those who also have a day job and teach part time to supplement their income.
In general I agree most scuba instruction pricing is very reasonable provided the student has a reasonable income, for example, most people here in UAE it is more than a month's salary. We see and experience a different view of our planet that more than 99% of the world's population will never know in their lifetime, and for only a few hundred dollars to learn a skill that will last a lifetime so for me it is a worthwhile investment.
What really used to annoy me when I lived in Jeddah, Saudi Arabia, were the people who suddenly realised that they were almost at the end of their 2 year contract and had not learned to Scuba Dive. One of the best instructors I ever knew, Ray Smith, would not teach these people, but they were soon taken aboard by the vulture and hyena instructors desperate to make a quick Riyal. They certified people that I would not have allowed to cross a busy road.
I soon realised during my Dive Master course, that teaching imbeciles was not something I wanted to be part of, so I quit. My main passion is underwater photography and although I never took a photography course I met up with three instructors who no longer taught and were committed photographers because that is what they wanted to do. I learned a lot from them.
The range of instructors in the world is varied, and for most people luck plays a good part in the draw, but some research and independent references also influence in who to take on.
The criteria laid out by the OP is pretty much spot on.